Apple was down 5% this morning. 

Investors are selling after yesterday's iPhone launches failed to excite.

We've seen analysts downgrading the stock, and rejiggering their models to factor in the new phones.

Essentially, everyone expected the iPhone 5C to be less expensive. Without a carrier contract, the 5C will cost $549 in the U.S. and $733 in China.

At those prices, it's just another high-end phone. 

As Walter Piecyk at BTIG, who maintained his buy rating, said, "Yesterday’s announcements were merely a slight modification on a phone release game plan that Apple has been executing on for years."

Instead of making the iPhone 5 $99 after a carrier subsidy, Apple went with the iPhone 5C. The upshot with the 5C is that the plastic case makes it cheaper and easier to make, which should boost margins. 

Apple also announced that it was going to start selling cases, which should also increase margins, and add some extra profits into the mix. 

But, the fundamental problem is that Apple didn't do anything to significantly increase its addressable market yesterday. 

Yesterday's announcement won't change the fact that Apple is getting smoked in China, where it already sells high-end, expensive phones. Analysts were thinking that Apple was ready to release a mid-range phone to increase unit sales. 

Apple didn't announce a deal with China Mobile, the giant Chinese carrier. But, an announcement is expected. It's supposed to come in November now.

However, Piecyk points out that 80% of China Mobile customers are pre-paid, which means they don't get a subsidy on their phone purchase. He estimates that 80% of the pre-paid buyers will be looking to get their first smartphone in the next 3-5 years. 

By pricing the 5C at $700+ Apple is giving up a huge chunk of the market. 

Apple has never, ever indicated that it was interested in chasing market share. 

But, Steve Jobs was notorious for saying one thing, then doing another. Investors and analysts may have thought that his successor, Tim Cook, would do the same thing. They're wrong. 

Cook said earlier this year, "winning has never been about making the most." 

That's not just lip service. He clearly doesn't want to chase market share. 

Today, investors are coming to terms with it.


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